Thursday, July 31, 2014

Global Impact: PEMEX Forms Alliance with Switzerland's Mecuria, JP Morgan to Import Nat'l Gas from US

According to The Latin American Tribune, state-owned oil giant Petroleos Mexicanos (PEMEX) said it has  formed a “strategic alliance” with Switzerland’s Mercuria and US-based JP Morgan Chase & Co. to import natural gas from the United States.

“The strategy will be established by leveraging JP Morgan’s North American physical natural gas business, which is being acquired by Mercuria,” PEMEX said in a statement.

JP Morgan Chase & Co. said in March 2014 that it planned to sell its physical commodities business to Mercuria Energy Group Ltd. for $3.5 billion, with the deal expected to close in the third quarter of 2014.

The partners expect to start operations in the fourth quarter of this year, with commencement of gas imports timed to begin with the opening of the Los Ramones pipeline, which crosses five Mexican states, Pemex announced.

COMMENT: The state-owned oil giant said the alliance would “guarantee a reliable long-term supply of natural gas for Mexico at competitive prices” and strengthen its position in the regional natural gas markets.

The deal also establishes a combined foundation for making inroads into other energy products and regions, PEMEX said.

The alliance will become one of the five leading players in the North American natural gas market, “positioning itself strategically and maintaining an integrated vision for the gas markets in México, the United States and Canada,” PEMEX said.

México imports roughly one-third of the natural gas it consumes despite having huge reserves of the clean-burning fuel.

The 2013 energy industry reforms, whose implementing legislation is being debated in Congress and calls for natural gas production to rise from 5.7 billion cubic meters per day today to 8 billion cubic meters per day by 2018.

Production is projected to soar to 10.4 billion cubic meters per day in 2025, allowing México to become a major gas exporter.